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Is Private Campaign Finance a Good Thing? Estimates of the Potential Informational Benefits

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  • Andrea Prat
  • Riccardo Puglisi
  • James Snyder

Abstract

What would happen if the current U.S. campaign finance system, mostly based on private donations, were replaced by a public funding scheme of the same magnitude? Some argue that public funding would deprive voters of useful information, but this can only be true if private donations are somehow targeted to "better" candidates. In this paper, we ask what voters can learn about the "effectiveness" of a legislator from the amount and pattern of contributions received during the campaign. We find that the total amount that a candidate receives is a positive, but weak, predictor of that candidate's effectiveness. Small contributions provide a strong and positive signal of effectiveness, while large contributions are a negative signal of effectiveness. Contributions from organizations also provide a positive signal, while contributions from individuals, parties, and candidates themselves do not.
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  • Andrea Prat & Riccardo Puglisi & James Snyder, 2005. "Is Private Campaign Finance a Good Thing? Estimates of the Potential Informational Benefits," Levine's Working Paper Archive 122247000000000960, David K. Levine.
    • Handle: RePEc:cla:levarc:122247000000000960
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    References listed on IDEAS

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    1. Stephen Coate, 2004. "Pareto-Improving Campaign Finance Policy," American Economic Review, American Economic Association, vol. 94(3), pages 628-655, June.
    2. Stephen Ansolabehere & John M. de Figueiredo & James M. Snyder Jr, 2003. "Why is There so Little Money in U.S. Politics?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 105-130, Winter.
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